For a long time, traditional IT resisted the cloud, but that has changed in recent years as companies have come to realize that they can’t survive without the agility, scalability and economics that only a public cloud approach can provide. Yet in spite of the clear advantages the public cloud brings, there are still many companies out there that resist it for a variety of reasons.

That’s where managed private clouds come into play. Vendors have begun offering a variety of approaches that give the feel of the public cloud, but inside the comfort zone of a customer’s data center. (The end user probably won’t be able to tell the difference.)

Which is not to suggest that it’s an either/or proposition when it comes to public versus private clouds. In fact, many companies go for a hybrid approach where they are running some workloads in the public cloud and some on-prem. Managed private clouds are kind of a hybrid of the hybrid approach giving customers more of a public cloud feel, but without actually sending any data there.

Taking care of it for you

One of the earliest manifestations of the private cloud was the open-source OpenStack project, which launched in 2010, just as AWS was beginning to really gain in stature. Vendors and customers were looking for a solution they could install in-house that offered some of the same advantages as AWS, but delivered inside the company data center in a much more transparent and open way.

Fast forward to today, and Canonical, the makers of Ubuntu Linux, have become a managed service provider for OpenStack. Mark Shuttleworth, Canonical’s founder and CEO, says by offering to manage OpenStack for the customer, his company is solving a real problem for OpenStack users.

“It solves the “stuck stack” problem. Anyone can bring a version up once,” he says. The problem is trying to manage updates and all that entails, and that becomes much more challenging. His company is offering a service and a level of expertise to help companies manage their OpenStack instances.

Just this week, Pivotal, makers of the open source Platform as a Service Cloud Foundry, announced a partnership with Rackspace to offer a managed version. This is much like the kind of management that Canonical is offering OpenStack customers, but for companies looking for an open source cloud-based platform to build applications (in Java mostly) that can run anywhere Cloud Foundry runs (which includes OpenStack, VMware, public clouds, etc).

Microsoft is taking a different approach. Earlier this month, Microsoft announced that it was releasing Azure Stack, a set of Azure services that customers can install on their own servers inside a private data center. Microsoft provides the nuts and bolts services framework, but it’s partnering with third party companies like Dell EMC, HPE and Lenovo to make it all work.

Oracle is taking a third approach. Just this week, it announced updates to a similar offering called Oracle Cloud at Customer, which as the name implies lets customers install a set of Oracle cloud services inside the customer data center. Unlike Microsoft, Oracle is offering more of a soup-to-nuts solution where they install, manage and update the service including the hardware for the customer, usually under a multi-year contract.

To the cloud?

If installing a cloud stack in the safety and security of the customer’s own data centers (especially with longer term contractual obligations) sounds counter-intuitive to you, you are not alone. But there are several legitimate reasons a company might want to run a cloud stack in-house, rather than in the public cloud, says Ray Wang, principal analyst and co-founder at Constellation Research.

“We’re seeing a big trend among customers to move cloud stacks inside customer’s data center for security, performance and governance,” Wang told TechCrunch. “On the security and governance, GDPR (the EU data protection rules) and the onslaught of hacking attacks have led a big push by larger Fortune 500 types to move to this model,” he said.

While Wang acknowledges the security argument may be overstated — it’s hard for any private company to bring the security resources available at the major public cloud vendors — he says there is a case to made for using a managed private cloud for performance purposes.

“As for performance in the stack, we still see some performance reasons, for example in the Azure Stack, that require extreme high performance cases, to bring these into a private data center or hybrid model,” Wang said.

There is also a web of legal and regulatory requirements that could require a company to keep the data in-house, says Steve Daheb, senior vice president of cloud at Oracle. “There are state and local governments, healthcare, [or simply] internal governance [rules] that require that companies keep data on prem,” he said. Oracle cited rather large customers like AT&T and Bank of America using the Cloud at Customer product.

Charles King, principal analyst at Pund-IT sees several drivers from simplifying the availability of and access to cloud-based applications to easing the adoption of hybrid cloud workloads, but perhaps most important is a limit to the cost-effectiveness of an entirely public cloud strategy. “In addition, a growing number of businesses seem to understand that the “everything in the public cloud” approach becomes increasingly expensive and unsustainable as deployments grow ever larger. That seems to be happening in organizations of every size/kind,” King said.

Looking for market opportunities

All that said, it still doesn’t necessarily mean that it is going to be a substantial market. John Dinsdale, an analyst at Synergy Research Group, a firm that follows cloud market trends, says these managed private cloud stack initiatives tend to be small compared to the number of companies going to the public cloud. “Only a small percentage of public cloud customers will be relying on [managed private] cloud stacks. It might be important in terms of cloud providers offering a full suite of options, but don’t expect the numbers to be big,” he said.

Obviously, these vendors recognize a market opportunity or they wouldn’t be putting the time, effort and internal resources into making and selling the products, but whether these solutions can be widely successful, or even make sense to many organizations, remains to be seen.

The public cloud moves fast, and even when you have a vendor like Oracle, Pivotal or Canonical (and others) managing the products in-house, it seems as though it would be difficult to achieve the scalability and flexibility that comes with the public cloud. This is especially true when you introduce complexity by moving it inside a private data center and adding some management layers on top of the solution.

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